The Southern Company is analyzing a new project and has asked you to calculate the project's...

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The Southern Company is analyzing a new project and has asked you to calculate the project's net income in A. the worst-case scenario; and in B. the expected scenario; and in C. the best-case scenario. The company's CFO has gathered the following information: Lower bound Expected value Upper bound *Note: values supplied in the following table are bounds, not cases. * Sales quantity 18,000 24,000 30,000 Sales price/unit $ 28.50 $ 30.00 $ 34.25 Variable cost/unit $ 12.80 $ 13.15 $ 14.85 Fixed cost $ 60,000 $ 70,000 $ 80,000 $ 150,000 Depreciation: Straight-line to zero for the four-year life of the project, with no salvage value. PVCCATS does not apply. Capital investment Required return 14% Marginal tax rate 20% The Southern Company is analyzing a new project and has asked you to calculate the project's net income in A. the worst-case scenario; and in B. the expected scenario; and in C. the best-case scenario. The company's CFO has gathered the following information: Lower bound Expected value Upper bound *Note: values supplied in the following table are bounds, not cases. * Sales quantity 18,000 24,000 30,000 Sales price/unit $ 28.50 $ 30.00 $ 34.25 Variable cost/unit $ 12.80 $ 13.15 $ 14.85 Fixed cost $ 60,000 $ 70,000 $ 80,000 $ 150,000 Depreciation: Straight-line to zero for the four-year life of the project, with no salvage value. PVCCATS does not apply. Capital investment Required return 14% Marginal tax rate 20%

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